When a spendthrift is created in California, it is a trust that puts limitations on a beneficiary’s access to the funds that are within the trust account. There are two benefits to this type of estate planning tool. First, it sees to it that the beneficiaries you care about are taken care of. On the other hand, it ensures that your assets get distributed according to the terms you want.
Terms of a spendthrift trust
A spendthrift trust can be revocable or irrevocable. It can include elements such as a trustee responsible for managing the trust, a grantor who establishes the trust (typically the individual creating it) and the identification of the beneficiary or beneficiaries who will receive the assets held in the trusts.
Unique characteristics of spendthrift trusts
The trust owns the assets held within it, retaining ownership rather than transferring it to the beneficiary. While the beneficiary still receives the assets, the trust dispenses them based on the schedule determined by the grantor and trustee at the trust’s creation. This controlled release of assets prevents the estate from being squandered due to irresponsible spending habits, simultaneously providing loved ones with an inheritance based on the allocated funds.
Benefits of a spendthrift trust
The primary benefit of a spendthrift trust is that it can protect your family’s assets from an unreliable beneficiary. It protects the estate while allowing the beneficiary to receive an inheritance. Since the trust is owned and managed by the trustee, it is also protected from creditors.
Estate planning can be difficult, especially when there are questions about how the beneficiary will use the money. This can create considerable uncertainty as you go about estate planning. A spendthrift trust allows you to plan for the future of those you care about while ensuring that your estate will be handled responsibly.